One Argument for Exchange Rate Irrelevance Is That

question 90

Multiple Choice

One argument for exchange rate irrelevance is that:

• A) MNCs can hedge exchange rate exposure much more effectively than individual investors.
• B) investors can invest in a diversified stock portfolio of MNCs that have different exposures to exchange rates.
• C) purchasing power parity does not hold very well.
• D) MNCs are typically not diversified across numerous countries.

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